Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde and New York
and Ed Lovelow in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up. Open AI ramps up
with more computing capacity from Oracle, expanding the Stargate initiative. Plus,
the US House of Representatives is on track to vote
on Donald Trump's tax and spending bill.
Speaker 3 (00:36):
What does that mean for tech?
Speaker 2 (00:38):
And the Trump administration lifts some export license controls requirements
for chip design software sales, specifically for China. Let's get
right to financial markets and as that one hundred is
pushing once again to fresh record highs strong jobs data
for the month of June. Halfway through the show, we're
going to go really deep on jobs and then we're
going to look at the labor market when it comes
to the technology sector. But there are other things happening
(01:00):
that are pushing the tech sector in XT markets higher.
A lot of it is related to compute capacity. Bloomberg
broke a really big story last night, and I want
to get right to it.
Speaker 3 (01:09):
The story's Oracles.
Speaker 2 (01:10):
On a two day basis, we saw a five percent
jump in oracle yesterday. We're pushing a little bit higher
again this Thursday. But the deal is open AI expanding
the Stargate project, getting more compute capacity in new states
and new sites beyond what they've already got in Texas.
The person that broke that story Bloomberg's Brody Ford, and he's.
Speaker 3 (01:29):
With us now.
Speaker 2 (01:29):
I think we need to get to the details of
what you reported, because there was a lot of detail
in it, Brody, specifically in terms of gigawatts.
Speaker 3 (01:36):
The scale of this new capacity.
Speaker 4 (01:40):
Yeah, we saw earlier in the year, you know, Larry
Ellison standing there in the White House talking about we're
going to deploy five hundred billion dollars with open AI
for data centers. A lot of people doubted that scale. Well,
yesterday we broke that they have inked a pretty unprecedented
deal four point five giggle watts. The usual rule of
(02:01):
thumb is that a gigglewats about a nuclear reactor, and
so we're talking about a scale of four and a
half worth of nuclear reactors or powering about three and
a half million homes. I mean, this is likely the
largest cloud deal of all time, and it's gonna be
tens of billions of dollars of chips of power. I mean,
it's gonna be hard to wrap our head around what
(02:23):
this looks like in the build out.
Speaker 3 (02:26):
Okay, what do we know?
Speaker 2 (02:26):
What are sources telling us about where these new sites
are going to be, what's under consideration? And kind of
like how near term this is?
Speaker 5 (02:35):
Right?
Speaker 4 (02:36):
So they've narrowed on a handful of data center sites, right,
I mean a ten states like Wisconsin or Pennsylvania or Texas.
They'll also be expanding the campus they've already built out
in Abilene that a lot of us have seen, you know,
images of how near term I mean, a lot of
this stuff is tough to get off the ground. Oracle
earlier this week said that the full ramp would likely
(02:59):
not hit into twenty twenty eight, and so it's it's
fairly far out, but I would expect to see some
of these sites come out and a pretty rapid clip.
We don't know exactly which one's gonna move first, but
you know, I'm sure we're gonna be starting to get
more details trickling out in the coming weeks and months.
Speaker 3 (03:16):
Let's talk about the Oracle side of this.
Speaker 2 (03:18):
This is a stop that's now again pushing fresh record
highs almost every day. At the moment, it's up forty
percent so far in twenty twenty five.
Speaker 3 (03:26):
This is a big win for Oracle.
Speaker 2 (03:28):
They are really pushing and changing their position in the
landscape of infrastructure and AI cloud computing.
Speaker 4 (03:36):
Three years ago, if you said Oracle major cloud player,
people would make fun of you, definitely, But today that's
not the case, right. I mean, they're making I think
around ten billion per year in cloud infrastructure. On Monday
they said the deal that we connected is this opening
I one will be thirty billion per year. I mean
that is triple the size of their entire current cloud
(04:00):
and so it's huge for revenue. The big question is
what it means for margins, And that's kind of the
classic with a lot of these AI businesses that they're
going to be buying a lot of chips and power
and construction, and that's going to constrain their margins. What
does that mean for cash flow? That's what investors are
asking this morning.
Speaker 2 (04:18):
Bloomberg's Brody Ford there with the reporting, let's get to
the analysis. This expanded deal between Oracle and open Ai.
It's also good news for some chip makers. That's according
to Bloomberg intelligence, who say the likes of Nvidia and
AMD are going to benefit here. Keunjin Sabani offered that
note and he joins us. Now inside all of this infrastructure,
at the heart of it is the compute, and the
(04:40):
compute right now in this market is largely coming from Nvidia,
but also to a greater extent increasingly from a AMD.
What's the thesis here that you've got congent.
Speaker 6 (04:51):
Well, two points, As Brady mentioned, Oracle has been really
beefing up their spending versus what we thought a year
or two ago. Now if you look at the estimates
now you're in for twenty five, it is going to
be the fastest CSP in terms of capex increases, so
definitely increasing the wallet share and becoming a serious buyer
of the chips. Second point, it is one of the
only hyper scalers or cloud providers among the top five
(05:14):
who does not have a custom silicon or an ACIC program.
What does that mean is majority of the capex that
is is going to spend to bring up this four
point five gigle wats of capacity is going to merchant
GPU providers, likes and media which it has been buying.
Most of GPS from in the past, but also AMD
because as they announced, they're ordering about one hundred and
(05:36):
thirty k M three point fifty five for the second half,
which equates to somewhere between three to four billion dollars
of revenue for AMD.
Speaker 2 (05:44):
Just real quick, con Jen Brody was giving us the
reporting on the dollar value of this deal to Oracle, right,
it's that thirty billion dollars that we were talking about
earlier in the week per year starting in fiscal twenty eight.
Are you able to model or do the math on
what these kinds of deals and the value of them
are to AMD and Video in terms of like number
(06:06):
of chips that they will send that way, or kind
of the pipeline of business that they're securing through Oracle.
Speaker 6 (06:14):
To some extent, because there are a lot of assumptions,
but what we can map is the gigawards to the
chip spending. So rather than the revenue that Oracle will
collect the four point five gigabards, assuming that's all brand
new data center build out, one gigaward approximately in today's term,
equates to sixty billion dollars of capex, which includes everything
(06:35):
from chips and hardware. So even if you had to
like make take conservative stance and cut it half for chips.
That still leaves you for what every gigaward at least
thirty billion.
Speaker 3 (06:44):
Dollars Bloomberg Intelligence is congense.
Speaker 2 (06:47):
Vanni, there with the analysis, we had the reporting, We
got the analysis.
Speaker 3 (06:51):
Now let's get the market reaction.
Speaker 2 (06:52):
Janet Murray, head of market analysis at RBC Berandolphin, found
it really interesting these big capital projects in infrastructure just
keep coming. What does that signal to you about what
the market should model for in the coming years ahead?
Speaker 6 (07:11):
As thanks for having me.
Speaker 7 (07:12):
I think the significance of this deal is that the
demountable computing power is just incestiable. And remember when deep
SIK come out, a lot of investors were worries that
actually they may not be the need for so much
computing power if the modeling is so efficient, But actually
(07:33):
that's not true. We see that there is high visibility
of the scale of the investment by sovereigns, by hyperscalars
and many corporates. So I guess this is really the
big conclusion is that the runway still is still very
long and the incentive to invest is still very high.
So I think the theme of investment in a particularly
(07:57):
in semiconductors and cloud which are the AI infrastructure is particalarly.
Speaker 2 (08:02):
Relevant Janet and Brodie's reporting. He's saying that this expansion
between Oracle and Open AI is four point five giggle
watt's worth of capacity and in the context of energy,
you could power this country at that scale. How do
you think about the energy sector and the energy infrastructure
(08:23):
requirements that markets are going to have to fund to
support these types of data center expansion.
Speaker 7 (08:29):
Again, I think the utility side energy side of things
goes hand in hand with the need for from shooting power,
and that's why we have seen our hyperscalar like meta
investing in nuclear energy for example. So I think the
quest or cheaper, more efficient energy would be there, and
I think that is why I think the US warming
(08:51):
basically the region that would lead the AI race, because
the US is basically self sufficient in the energy production
relatively cheaper energy compared to say Europe and for example,
the UK. So I guess that's a very important conclusion,
is that there is incentive for companies to invest and
(09:12):
base their production in the US to access is cheap
energy base.
Speaker 2 (09:17):
Janet, the story this Thursday is treasuries are falling, the
dollar is stronger, and equity markets, particularly the technology sector,
pushing fresh record highs on the Nasdaq one hundred. Give
me your reaction to the jobs data and the coprint
that we got this morning.
Speaker 7 (09:33):
Well, I would say that data is basically goldilots because
on one hand, you get better than expected jobs data
in general a softening trend, but it's still okay. It's
still reflective of a solid labor market. An employment rate
is lower, and at the same time, wage growth is
actually slower despite a shrinking labor force. So I would
(09:53):
say it's a goldilocks, which market clearly likes. And I
think the conclusion is that the Federal Reserve really is
in urgency to cut raise. But that's fine because I
think the markets would prefer the evidence of a strong
labor market rather than fretting over the exact timing of
the rate cut.
Speaker 2 (10:11):
I do see some outperformance in technology. Why is that?
Why is that? Is it just a waiting issue right
now and technology is what this market is or is
there something in this economy and the path forward for
the Fed that makes this sector more attractive right now?
Speaker 1 (10:29):
Yeah?
Speaker 7 (10:29):
I guess there are lots of reasons right. First of all,
in terms of earning it's growth profile, technology is still
the brightest spot out there, as I mentioned, a clear
visibility on AI investment. I think secondly, I think in
terms of the productivity gains, I think the tech sector
is likely to see or have a lot of those
(10:50):
productivity surplus. And of course, I think in terms of
the US market, I think the tech sector is where
the actionists to access the aif them et cetera, and
if we see for example, rape cuss really coming by.
I think law barn Yiel's law interest rate also partically
(11:12):
benefit those growth areas as well. So really a combination
of factors.
Speaker 2 (11:17):
If you're a technology investor, that was the what you
needed to know. Janet Mouri, head of market analysis at
RBC BRA and Dolphin, thank you very much. There is
a lot more coming up the house pools and all
nighter as Republicans race to get a tax bill to
President Trump's desk before their July fourth deadline. We're going
to live to Washington, DC next and we will have
the latest on where things stand.
Speaker 3 (11:38):
Don't go anywhere. This is Bloomberg Tech.
Speaker 8 (11:42):
Live, the good life, good name.
Speaker 3 (11:53):
Welcome back to Bloomberg Tech.
Speaker 2 (11:54):
You're looking at live pictures from Capitol Hill where House
Minority Leader Hakeem Jeffries is delivering a blistering rebuttal of
the tax bill that's now going into its sixth hour.
Speaker 3 (12:05):
Here with the very.
Speaker 2 (12:05):
Latest, Bloomberg's Tyler Canda out in Washington, DC. What is
the latest? What do we expect to happen? What do
we need to know?
Speaker 5 (12:13):
Yeah, hey, Ed, So, the House Democratic Leader Hawking Jeffries
has something known as the magic minute, which means that
he can speak for however long as he wants, and
as you mentioned, he started at four fifty three am Eastern,
so we could be in this for the long haul.
But it really does feel like they're sort of delaying
the inevitable because Republicans a pure poised to pass President
Trump's signature legislative Achievement, which would be the one big,
(12:36):
beautiful bill. Once Leader Jeffries is done speaking, House Speaker
Mike Johnson might take the mic, or they could try
to get this done as soon as possible and this
would proceed immediately to a vote on finalized passage. Once
that happens, we're looking for that magic number of two
hundred and seventeen, which means House Speaker Mike Johnson can
only afford to lose three votes, but he appears to
have it. It seems like Republican leadership was able to
(12:59):
flip some of the staunches critics of this bill, those
members of the House Freedom Caucus, those Republicans that were
pitching themselves as fiscal hawks, and our reporting on the
Hill this morning indicates that they did get some sort
of concessions and assurances from this White House in order
to flip their votes, including one that I know that
you pay close attention to, which is when it comes
to the phase out of those clean energy tax credits.
(13:20):
Ralph Norman told our reporter on the Hill today that
one of the assurances that the White House gave them
was that there would be strict enforcement when it does
come to the phase out, particularly around solar and win
tax subsidies. So that's something to look forward and look
out to as we try to glean more details on
exactly what it took to get these Republicans to flip
(13:41):
their vote when it came to the procedural vote.
Speaker 2 (13:43):
Earlier this morning, tailer technology markets in real time and
as that one hundred already pushing fresh record high is
now extending its gain in the session to one percent.
It is a short week because it is a July
fourth holiday this Friday in the United States. There's a
lot being made of, like the symbolism of the President
signing this bill July and fourth. I heard you speaking
(14:03):
with Bloombogs, Matt and Miner about that earlier.
Speaker 3 (14:05):
Why is that symbolism.
Speaker 5 (14:06):
There, Well, it really was this self imposed deadline from
the administration that they wanted to get this done by
July fourth. We are expecting a pretty big signing ceremony
either later today or tomorrow, so that President Trump can
tout this legislative achievement that they're really hoping we'll pair
with some of these potential trade deals frameworks that we
(14:27):
could get next week ahead of that July ninth deadline
that they have put into effect. Because the administration is
really hoping for a few different things to happen here.
They want to see a confluence really of economic factors
going into the summer so that they can help push
ahead when it comes to President Trump's economic agenda. Now,
of course they're dealing with criticism. We have the House Speaker,
for example, railing against some of the changes when it
(14:49):
comes to Medicaid. But this administration is really trying to
focus people on this idea of stabilizing the debt to GDP. Yes,
this bill is going to add significantly to the national debt,
but it is the other policies that they're looking to
put into place that ultimately they say will help grow
the economy.
Speaker 2 (15:04):
The national debt pile the big focus of Elon Musk,
as we've discussed all week, Bloomberg Tyler Kendall terrific work
out in Washington, DC.
Speaker 3 (15:11):
Thank you very much. Let's get to another big story.
Speaker 2 (15:13):
The US and China are beginning to implement their recent
trade deals, and as part of that, there's some easing
of restrictions on critical technologies, including export license requirements for
chip design, software sales, particularly in China. Bloomberg's Peter Elstrom,
who leads the team in covering Asia tech and European tech,
is with us. So what we're talking about is EDA
(15:35):
and as of last night, we're hearing from the key players,
the key names in the DA space that they're now
free to do business in China.
Speaker 3 (15:41):
What do we need to know?
Speaker 9 (15:43):
Yeah, that's right. So this is a strange one. It
was just in May when we found out from the
companies that they were going to have these export restrictions
on China. Their EDA software is necessary to be able
to design semiconductors. It was also strange the way that
it got announced. It was the companies that actually were
these new restrictions, it was not the Commerce Department, which
is the agency behind that. Again this time it's kind
(16:05):
of similar. We had Semens come out first. Cadence Design
Systems and Synopsis are also affected here. They came out
and then they said it in fact, those restrictions are
now being rolled back. They're not going to have the
same kind of restrictions on servicing and supporting selling into
China to support their customers.
Speaker 3 (16:20):
So what's going on.
Speaker 9 (16:21):
Behind the scenes? As you say, the US and China
are now in the middle of East trade negotiations. Back
in May, China was kind of playing tough. They were
not exporting some of the rare earth the minerals that
American companies needed. Now that the negotiations are preceding, China
struck this tentative agreement to be able to ship those again.
In the US and China are coming back to the
(16:41):
table and as a result, these companies are going to
have a little bit more breathing space. But that's very unusual.
You've got export controls, which are typically national security issues
now being traded as part of the trade negotiations.
Speaker 2 (16:54):
We're seeing some of the chip makers push higher, but
really the stories around the software name, Cadencenopsis, the two
that you mentioned also pushing higher. Will show those in
just a second. The modern day cutting edge chip has
billions of transistors. Right, No human brain can do the
blueprint or designed for that. But there is some concern
here that Huawei, in particular, if they are having free
(17:17):
access to EDA, that they can use that technology in
that software platform to close the gap a little bit,
you know, design their own cutting edge chips. Why is
America not more concerned about that, Peter, Yeah, that's a.
Speaker 9 (17:30):
Key issue in the technology race between the two countries.
You have the US ahead and a few different key areas.
In particular, DA is one of the most important ones.
Of course, semiconductor equipment is another one. The Netherlands ASML
is by far the leading player. While Way however, has
been able to break through some of these barriers. It's
(17:52):
become a national champion for China. It's helped try to
focus on some of these key bottlenecks that they have.
DA is one of the key areas, or if they're
able to use these tools, they can step ahead and
design some of these chips. They have the surprise the world,
i'd say, with some of their advancements and semiconductors, particularly
this seven nanometer chip that they used in one of
(18:13):
their smartphones in the past. But now they have not
been able to make some of the progress, have not
been able to move forward quite as quickly. So these
tools are going to help them make some of those
steps going forward again. That's why it's so surprising that
they're trading this away in the negotiations between the US
and China.
Speaker 2 (18:30):
Bloomberg's executive editor for Global Technology, Peter Elstrom, thank you
so much. It's time for talking tech, and first up,
Deep Seek ramps up hiring. The Chinese AI startup posted
ten positions on LinkedIn, indicating it maybe looking to lure
talent from outside of its homeland. The listings include three
(18:52):
roles focused on general intelligence, with the positions based in
Beijing and Han Joe plus ASML and other European semiconductor
stocks extended losses. Today, there was a report from Nicky
Asia that said Samsung would be delaying its completion of
a chip factory in Texas. The report, citing sources, says
the delay is due to Samsung struggling to find customers
(19:15):
for the plant's output and some news that broke this hour.
Core Weaves the first company to receive the latest AI
system based on Nvidia's newest chip. Dell delivered the first
GB three hundred MVL seventy two.
Speaker 3 (19:28):
Rack of servers to core Weave and would deploy them.
Speaker 2 (19:31):
In the US, with core Weave aiming to bring more
of the tech online throughout the year. Open AI is
one of Corweave's customers and the infrastructural players, saying the
new systems will work well for larger, more complex models.
That's the reporting, that's the detail. I want to get
some more analysis on this. One man deep seeing of
Bloomberg Intelligence is with us. There's this like constant tracking
(19:53):
of the launch and ramp of Nvidia's latest generation server
design that has the latest generation chip and chip combination
in it.
Speaker 3 (20:03):
Col Weave goes first, what do you make of that?
Speaker 8 (20:06):
Well, when I look at in video's release cycle, they
are on a one year rhythm and in between that
year now they are launching the black Vell Ultra before
the Ruben series comes online. And look, they're almost giving
a fifty percent performance upgrade with the black Vel Ultra
in terms of token processing. So from that perspective, Corviv
(20:28):
having that chip first really gives them a leg up
over the hyperscalers, which will also get their in Vidia allocation.
But for Corviv, you know they have a backlog of
about twenty six billion. To convert that backlock to revenue,
you need the most kind of impressive in Vidio chips
(20:48):
first and that helps with the faster backlock conversion.
Speaker 10 (20:52):
So really good news for Corevive, especially on the training front,
because a lot of these latest black Ultra chips I
believe will be used for training and then the older
series will be used for in printing over time.
Speaker 2 (21:04):
So call we've stock really pushed higher after news came out.
I'm also looking at Dell, like, help us understand the
Dell component in this ecosystem.
Speaker 8 (21:13):
Yeah, well, Dell is the one who is making that server,
So in Vidia is providing the chip and krviv is
really bringing those racks and the servers online to be
consumed in a cloud consumption model. But Dell is the
one who is actually assembling that server and making sure
(21:34):
that it can be delivered to coreviv. So from that perspective,
they are part of that supply chain and it's a
good thing that they get to, you know, do that
for Nvidia before any other server maker like Quanta or
you know, any other Chinese OEMs come into play.
Speaker 2 (21:52):
Very quick, we just have twenty seconds, Mandy, Well, what's
the BI big picture thesis right now on how this
AI infrastructure build outs going.
Speaker 8 (21:59):
I mean, Oracle and open Ai really raised up the
ante when it comes to you know, their big announcement
the thirty billion dollar contract and now this news. So
to my mind, you know, the infrastructure supercycle is really
playing out and you're seeing that right now.
Speaker 2 (22:17):
Man, keep seeing Bloomberg Intelligence of BI. Great to have
the reaction here on the show.
Speaker 3 (22:28):
Welcome back to Bloomberg Tech.
Speaker 2 (22:30):
Let's get right to the markets and I'll start with
the technology sector in the acuity market. Right then, a's
that one hundred continuing to push fresh record highs. But
we got the job's data for June strong labor market,
and the story is really clear. Equities pushed higher outperformance
in the tech sector, but you also saw treasuries full
the dollar strengthen. Take all of that in aggregate. It's
(22:51):
really important. This is what the bomb market looks like.
I know we go there less often, but there is
always a relationship between what's happening in yields and particularly
valuations around technology sector. Now, this was the blowout jobs report,
and there's any one guy that I want to go
to on a daylight today, that's Bloomberg's Economics and Policy
correspondent Michael McKee.
Speaker 3 (23:09):
As you know, I just don't know.
Speaker 2 (23:11):
I don't really understand the granularity of the job's data,
the revisions, the changes, what is the need to know
in June, and the kind of explanation for why markets
reacted the way they did.
Speaker 3 (23:22):
Well.
Speaker 11 (23:23):
The explanation for why markets reacted the way they did
is fairly simple. The economy seems stronger than it was
expected to be, and that would suggest that corporate earnings
can stay strong. But this is a report that looks
better on the surface than it does underneath. It's not terrible,
but it's not as great as it looks. We had
one hundred and forty seven thousand jobs created, and the
(23:44):
unemployment rate falls to four point one percent. But of
those one hundred and forty seven thousand jobs, seventy three
thousand were in government employment.
Speaker 3 (23:54):
Most of that.
Speaker 11 (23:54):
State and local education schools are out in June, so
there's probably a seasonal adjustment problem with these numbers that
will cause them to be revised lower. Private payrolls were
up only seventy four thousand. That's lower than we had
been seeing, so there is some concern about all this.
And of course the unemployment rate falls because one hundred
(24:16):
and thirty thousand people left the labor force, so ed
not quite as good as anticipated, and of course we
want to know how they're doing out in.
Speaker 3 (24:25):
Your neck of the woods.
Speaker 11 (24:27):
We lost five thousand jobs in computer manufacturing, another thousand
in semiconductor manufacturing. Web search portals and hosting lost three
hundred jobs, so on the tech side not so great either.
Speaker 2 (24:41):
I'm really grateful for that level of detail on the
tech sect, like we're going to go deep into what
the environment is right now, particularly in software with our
next guest, But what I'm seeing on the news cycle
and timel this morning is very FED related a lot
of questions directed towards the administration and about what the
FED should or shouldn't do.
Speaker 11 (25:02):
Why is that, Well, everybody wants lower interest rates because
of course it's going to mean higher corporate profits. But
this report pretty much pushes the FED out of that.
For the July meeting, there was only a couple of
FED officials who were talking about July. September still stays
on the calendar as the most likely first month for
a rate cut. We'll see what happens next week when
(25:25):
we get the CPI report on the fifteenth. That could
make a difference to the Fed. But at this point
it looks like the Fed stays on hold. And of
course the President will keep tweeting that he doesn't like j.
Speaker 12 (25:39):
Powell.
Speaker 2 (25:40):
Bloomberg's Michael McKee, International Economics and Policy correspondent. It's great
to have you back on Bloomberg Tech. Let's get right
to tech and more on the jobs outlook in the sector.
Eric Wosakowski is the Bespoke Partner's CEO, an absolute specialist
in executive search, particularly in the fields of SaaS software
also private equity here in the United States, and I
(26:03):
want to talk about what that market is like right now,
particularly at the higher end. There's been so much in
the news cycle about talent poaching. Frankly, but just on
the data this morning, was there any read through for
you that directly correlates to what you're seeing in the
technology sector?
Speaker 8 (26:20):
Ed?
Speaker 13 (26:20):
Thank you for having me on. I tend to agree
with Michael. I think the headline news sounds fantastic, but
I think when you peel back the onion, private sector jobs,
particularly in tech and innovation, are flat. CEOs today are
trading on uncertainty in the market, whether it be the
impact of the tariffs, the geopolitical environment. That said, I
(26:41):
don't think it's a negative situation because I think what
we saw yesterday with Microsoft announcing they're cutting more jobs
is CEOs over the last six months have really tightened
their belt to see how the market pivots. If we
get negative implications from tariffs, they're going to be able
to weather the storm. But I actually think the underpinnings
here are on a positive economy in the next six
(27:04):
to twelve months, a strong future, and I think CEOs
are sitting back with capital to invest. Is they get
favorable news on tariffs in the geopolitical environments and hopefully
a rate cut.
Speaker 2 (27:15):
We did hear from the administration, so to speak. This morning,
Stephen Moran gave an interview to Open Interest, one of
our earlier shows. He leads the Council of Economic Advisors.
Let's listen to what he said.
Speaker 14 (27:28):
What we see is an economy that continues to continues
to defy expectations, continues to define all the doom and
gloom that's out there, whether it's about the border, or
immigration or tariffs, just labor market continues to power ahead.
There were tons of predictions that there'd be a disaster
of labor market because of the border policies, and nothing
could be further from the truth. The economy continues to
(27:48):
create jobs, and if you look at the details of
the jobs, all of the job gains since the president
of office are due to native born Americans, and there's
actually been a decline in foreign born worker which means
that all of the benefits of the expanding economy are
recurring to Americans instead of migrants.
Speaker 2 (28:05):
What Stephen outlined, they're seeing in the relationship between policy
and how it impacts fiscal policy and political policy and
how it impacts the jobs market. Do you see what
he explained reflected in software and SATs.
Speaker 13 (28:23):
I don't think it's reflected yet. I think there's an
opportunity going forward because the largest creator of high paying
good jobs in the United States is innovation and private equity.
And I think when we look at the number of
deals that are done in private equity, the investment that's happening,
I think we're still in a wait and see mode.
I think if you look year over year, the number
of private equity deals is down. That said, in speaking
(28:46):
with the investment banking firms, their mandate pipelines are full.
In speaking with our private equity clients, they're reviewing a
record number of new deals. And I think the next
six to twelve months, I really think we're going to
start to see the deal activity pick, which is going
to fuel investment in jobs.
Speaker 2 (29:03):
So the big story has been mister Mark Zuckerberg, according
to mister Sam Outman, the CEO of Open Ai, approaching
talent in the field of AI, but let's call it
software and offering. According to Sam Outman, pay packages of
one hundred million US dollars.
Speaker 3 (29:25):
Is that the kind of market that you're seeing.
Speaker 13 (29:27):
This is what you specialize in absolutely, and we're not
privy to those particular deals. But I think the labor
market at the high end in software tech SaaS is
very tight because you don't have that natural flow of
deals and exits that creates natural term You've got a
number of assets that are at the ready to transact
(29:49):
in the next six to eighteen months, and so executives
today are not reticent to make a move, and so
that notion of poaching, the notion of having to overpay
to attract star executives for those open roles you need,
is absolutely happening. The premium proven executives are at a
premium right now, and that's why they're demanding outsize pay
(30:13):
AI is clearly another area that's on the frontier. The
top executives that are leading way there are demanding outsized
pay packages.
Speaker 2 (30:22):
Eric just very quickly, how does Bespoke use technology to
find a solution in that type market.
Speaker 13 (30:28):
So we have, as far as I know, the first
executive index in executive recruiting. It's focused particularly on the
software market. We used AI and mL to index six
hundred and seventy six thousand software executives in North America.
The technology gives us key indicators on job fits, propensity
(30:49):
to make a move and the like, and so we,
as far as I know, are the first and are
going to continue to push the envelope on technology and recruiting.
Speaker 2 (31:00):
Eric Walzakowski, it's great to have you on the program,
Bespoke Partner's CEO on this job's Day, but also there's
so much conversation around what's happening right now in the
technology jobs market.
Speaker 3 (31:10):
Thank you very much.
Speaker 5 (31:11):
So.
Speaker 2 (31:11):
Coming up, Amy Saper from Uncoort Capital joins us talk
about the state of seed stage investing and competition to
get in early. How common a theme has that been
in recent weeks? Really looking forward to this one. Stay tuned.
That's next.
Speaker 3 (31:24):
This is Bloomberg Tech. It's time for the VC Spotlight.
Speaker 2 (31:41):
Our next guest is a classically trained singer, backed Michael
Jackson in one of his music videos and competed across California.
She's also worked at some of the world's most important
technology companies, Twitter, Uber, and Stripe, and she's now a
partner at Uncourt Capital, at one point two billion dollar
venture firm chasing the biggest potential names in AI. Amy
(32:03):
Safer joins us here in San Francisco, Welcome to the program.
Thanks for having me increasingly on this program. At all
of the dinners I'm going to, there is a big
battle to get in earlier. Actually, sometimes founders don't really
have a fully baked idea. And reading your notes and
(32:24):
the thesis, but also being subscribed to tasting notes on
Cork's newsletter, that's kind of where the focus.
Speaker 3 (32:29):
Is right now. Absolutely so.
Speaker 15 (32:31):
Here at Kirk we are focused on seed investing, so
we typically write the first institutional check into a company.
We are really excited about what we're seeing in AI,
and we back founders with a deep belief on a
new customer segment or a new company, and we're trying
to back the founders that are building the companies that
are really going to define this next decade, and virtually
(32:53):
all of those have AI as they're.
Speaker 3 (32:54):
Undercurrent right now.
Speaker 2 (32:55):
What is also true is that the scale of the
seed round is being redefined. I see seed rounds in
the high tens of millions, depending on which sort of
corner of the technology market it is.
Speaker 3 (33:10):
How has that changed things for you? Yeah, absolutely so.
Speaker 15 (33:13):
I think if you look overall of the seed market,
it is true that rounds are getting larger. I think
the average in Q one was over three million, up
from maybe two and a half last year. So the
large rounds of the tens and twenty millions do make
the headlines. Those are not the norm of what we're seeing,
though they do occur. I do think it's true that
(33:33):
companies and founders are raising a little bit more reflective
of the increased expectations that the Series A investors are
placing relative to a couple of years ago.
Speaker 2 (33:42):
There's what you can do in the field of AI,
and then there's what you can do with AI. What
is it that you're looking for in a founder right now?
Like people would say, well, I'm ANAI adjacent company or
I'm AI we're native, they might just be using AI
to do something else. They might be not necessarily developing
(34:05):
a new technology so to speak.
Speaker 15 (34:07):
Yeah, absolutely, so, I think AI is already rapidly shifting
from being a sector that you might invest in into
encompassing every startup so whether their core product is AI native,
and we do have several of those in our portfolio
IVO for example, in the Legal Contract Review GPT zero
for copy editing. We also have companies that are selling
to AI companies so tail scale counts companies like Mistroll
(34:31):
and Perplexity and others amongst their customers set and are
emerging as the de facto networking solution for those AI companies.
So we are focused on companies that are cognizant that
the market is changing right now, and so whether they
are building that into their product, whether they're using it
in their back office to streamline some of their operations,
or whether they're selling to AI customers, it really is
(34:52):
everywhere right now.
Speaker 2 (34:53):
I invite you to reflect on your music career, but
I think largely your career in technology Stripe Uber, Twitter
now known as X. Are you more of an operator
than then traditional finance and how are you helping the
founders that you're backing.
Speaker 16 (35:09):
Yeah.
Speaker 3 (35:09):
Absolutely.
Speaker 15 (35:10):
I leverage my operating career every day, and I will
say my background is a mix of product, product marketing,
international expansion. I use the product marketing side far more
than I thought. I'm particularly attracted to companies and founders
that are largely technical, building AI enabled applications for engineering,
product and design teams, and they might not have a
product marketing or a sales background, and so I help
(35:32):
them define who's their ideal customer, how do you reach them?
How do you get your first sets of customers? And
that's such a critical set of activities to do with
the seed stage.
Speaker 2 (35:41):
I know a lot of bench capitalists watch this program.
Many of you are not operators. You have a finance background,
nothing against any of that, but really interested in the
operator side of the story.
Speaker 3 (35:51):
Where is it that the founders are struggling right now?
Speaker 2 (35:53):
Like capital is basically commoditized, right, so what is it
that they say, like we really need your help with
imminent Is it hiring putting operational staff?
Speaker 3 (36:03):
In absolutely?
Speaker 15 (36:04):
I think it's two main things at the seed stage
that we focus on. One is really honing on getting
as specific as possible about who your ideal customer is.
And that's so critical for the seed stage because you
have the large horizontal players, the lms that are trying
to be the horizontal layer for everyone. Where seed stage
companies and early stage companies can really compete is by
(36:25):
focusing on a particular customer segment and owning their workflow.
Speaker 3 (36:30):
End to end.
Speaker 15 (36:31):
And so we spend a lot of time there and
then helping them identify the right talent that they need
to achieve those milestones and reach those.
Speaker 2 (36:39):
Customers, Amy say pert partner un Court Capital, thank you
very much for joining us here. Former OpenAI board member
Helen Toner says Mark Zuckerberg and Meta's lavish spending for
top AI talent may not guarantee their success. On Bloomberg
(37:00):
Insight with has Linda I'm in.
Speaker 16 (37:03):
What we're really seeing here with Meta is metas started
to get a reputation of having a little bit of
a dysfunctional AI team, not really having its organizational structures
set up in a way that Billy butts them succeed
and innovate. And what I think we're seeing here is
CEO Mark Zuckerberg really stepping in and saying, Wow, we
have to do something differently. We need a big new push,
we need a big new effort. The real question is
can it turn around Meta's fortunes and can it turn
(37:25):
Meta into a real juggernaut.
Speaker 2 (37:29):
Staying on Meta, the company's Twitter alternative Threads has grown
to three hundred and fifty million monthly users since his
debut two years ago. Still, the social media platform is
continuing to work on finding their own identity among the industry.
So the subject to today's Tech in Depth newsletter written
by Bloombers Kirk Wagner. I said Twitter, I of course
meant X the platform formerly known as Twitter. I don't
(37:51):
know about Threads. Like when it launched, I used it
a lot because I like the interaction between Instagram and threads.
Like one thing I posted there I could take there.
I don't use it in the same way to share
news as I do potentially on x or even LinkedIn.
But it's it's your teching depth newsletter. What's the kind
of conclusion here.
Speaker 12 (38:11):
Well, I think we're in the same boat, ed, because
that was sort of my thinking here as we come
up on the two year anniversary of this product. I
like threads, I use threads, but I still ask myself,
what is this thing for?
Speaker 8 (38:24):
Right?
Speaker 12 (38:24):
I think with Twitter, old Twitter, I knew what that was.
That was the place I went for breaking news. That
was a place I shared breaking news. That was where
I assumed that I would get, you know, things that
are happening right then, right now, right around me. And
I just don't really feel that from Threads. And part
of that is that I don't think they leaned into
politics during this last election cycle, and in my opinion,
(38:46):
sort of missed an opportunity to plant that flag on
the news side, and they made a few things changes
in the last few months that make me think maybe
they do care more about news and they want to
move in that direction. But again, two years in, my
one critique of platform is what do we use it for?
Speaker 8 (39:03):
Well?
Speaker 2 (39:03):
Also, how does meta position it and value it, you know,
as a platform visa the WhatsApp and Facebook and Instagram
commercially or otherwise.
Speaker 12 (39:16):
Yeah, I mean I spoke to you know, the executive
who's running that team, Emily Dalton Smith, earlier this week
and she said, you know, it's a platform for exchanging
of ideas, right, It's clearly text. It's very much meant
to stoke some type of interaction between people in a
way that even Instagram I think is very much you know,
you sort of post something and people observe it. Right,
(39:36):
this is meant to be more back and forth. But again,
what are you talking about there?
Speaker 8 (39:41):
Right?
Speaker 12 (39:41):
Like people will find their communities, But what makes you
want to open that app every single day and make
that a destination for yourself? And that's where I feel like,
you know, I at least don't know exactly why I'm
opening threads.
Speaker 3 (39:55):
All the time.
Speaker 12 (39:56):
I hope that it will be because it becomes a
news source for me down the line. I just don't
think we're there.
Speaker 2 (40:01):
Yet Bloombos Kurt Wagner, who is also the author of
Battle for the Bird, the book on Twitter Elon Musk's
acquisition of Twitter in its transition to X really really
highly recommend you go read that. That's why I kept
referring to Twitter. Let's get to another really important piece
of reporting. Immigration lawyers are advising clients to scrub their
(40:22):
social media accounts of controversy or politically sensitive topics, warning
the posts could be used to block their entry to
the US or.
Speaker 3 (40:31):
As grounds to remove them.
Speaker 2 (40:33):
Bloomberg Cecilia Deannastasio has been reporting this and it's a
particular segment that we're talking about. It's people who are
online influence, influencers to a certain extent. What have you
learned and what's the need to know?
Speaker 17 (40:47):
Sure, so one in five Americans gets their news today
from influencers. Influencers have a lot of power over what
people think, especially politically these days, and what we heard
from immigration lawyers is that just bite influencers status as
citizens in the US, they are being advised not to
post on topics that the lawyers are considering hot button
(41:08):
for fear of potential repercussions.
Speaker 3 (41:11):
So this is potentially severe.
Speaker 2 (41:15):
It's part of a broader backdrop where migration in and
out of the United States is in focus. We talked
about it earlier in the Hour in the job sector.
Are there any sort of examples of where this is
already happening.
Speaker 17 (41:31):
Sure, we have seen several examples of influencers in the US,
both people who have been born here, people who emigrated here,
people who might be undocumented facing repercussions.
Speaker 15 (41:43):
For the way that their speech is viewed by.
Speaker 17 (41:45):
People both close to government and inside of the government.
One of the examples that we use in our story
is far left leaning twitch streamer Hassan Piker, who's been
very outspoken on Palestine. He was detained in questioned when
he was bring back into the country to Chicago O'Hare,
and what he told us in an interview was that
he believes that this was a tactic for people to
(42:09):
become afraid of sharing their opinions on topics that might
not align with current governmental positions.
Speaker 2 (42:15):
Cecilia just very quickly. Has there been any reaction to
our reporting from the government.
Speaker 17 (42:21):
We haven't seen anything yet, but one of the concerns
that have heard from people who have read the story
is that today's influencers who speak on politics tend to
actually be more conservative than left leaning, according to a
recent pupil and considering some of the concerns around speaking
about certain topics in certain ways, there are worries that
(42:41):
that gap might actually widen overtime.
Speaker 2 (42:44):
The HS Assistant Secretary for Public Affairs, Trishop Pacoffin also
emailing us saying that their officers are following the law,
not agendas. Really check out that reporting from the team Bloomberg.
Cecilia Deannastasia, thank you very much. That does it for
this edition of Bloomberg Tech. It's a show week in
the United States. There won't be any show this Friday
because of the July fourth holiday, but this was a
(43:06):
big show, so much to recap.
Speaker 3 (43:07):
Check out the b Tech podcast.
Speaker 2 (43:09):
You know where to find it on all the Bloomberg
platforms and online, iHeart, Spotify and on Apple.
Speaker 3 (43:16):
From San Francisco, this is Bloomberg Tech.